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I have written before about AIM Listed Ireland based Great Western Mining (LSE:GWMO) noting that it shares far too many connections with mega joke valuation company US Oil & Gas (USOP). I note that today shares in Great Western are off by 16% at 2p valuing the company at £1.3 million. It doubt very much that it is worth that much. To me the only question is when shareholders will be put out of their misery by this company running out of cash. Its accounts are presented in an “interesting” manner and so long suffering suckers, oops, I meant shareholders may not have realised how grim the picture is.
If you missed the hilarious joke valuation that is US Oil & Gas my story Irish Danish crapshoot in Nevada says it all.
As at 30th June the company had net cash of 318,403 Euro it boasted. Sure. But it also had trade liabilities of 239,439 Euro which it did not boast about. So in effect net cash as at 30th June was just 78,963 Euro. My guess is that by the time interims were reported in September real net cash was more or less sod all. In either Euro or Sterling.
Administrative expenses are, the company says, kept to an “extremely lean” level. That meant costs of 214,801 Euro in the first half. Frankly if 35,000 Euro a month is extremely lean then so is deluded lefty lardbucket Michael Moore. But that is not the point – you can do your sums, the only way that Great Western had net cash as at when it announced its results was by not paying its bills.
But there is another sleight of hand in the way Great Western presents its accounts. It has a figure for “expenditure on intangible assets.” Go on have a dig around. What does this capex (so not run through the P&L) refer to? Well knock me down with a Leprechaun’s willy warmer. It refers to the money spent on er…drilling and other exploration activity. Now I would have thought that this was a cost of doing business as a mining explorer so running it through the P&L might be better. But what do I know?
The point is that it is cash out of the door and in the first half it amounted to 227,060 Euro. And we were promised a 9 hole drilling campaign (Great Western is a great one for the promises, check out its old releases) with the interims.
However on November 14 Great Western raised £550,000 before expenses at 3p With the shares already at 2p I guess those who stumped up cannot exactly be jumping for joy – a 33% loss on 6 weeks is good going. But what I wonder is the cash position now?
If we start on July 1 with net cash of 78,963 Euro and then knock off “lean” admin costs of 214, 801 ( I assume H2 is much the same as H1) plus another 227,060 Euro for drilling but add back 610,000 Euro ( the placing minus costs) we get to a sum of 247,102. Put another way if Great Western maintains its “lean” admin costs at the same rate as last year and does not cap its exploration spend ( that 9 hole drilling programme), this company will have net cash minus trade liabilities of exactly 0 Euro on or around April 5th – the end of the tax year. Or the company could can its drilling programme altogether and fund its “lean” administrative costs for about seven months.
Either way this is bleak and sooner or later Great Western is toast unless another bunch of suckers ( sorry acute canny investors who enjoy bottom fishing) sign up for a new placing sharpish. But at what price?. If you are a shareholder, I’d sell now.
For alerts on all articles written by Tom Winnifrith on 11 UK and US websites follow him on twitter @tomwinnifrith or register HERE for his free bi-weekly newsletter, the Tomograph.
